Okla. Stat. tit. 12A § 1-9-204
Okla. Stat. tit. 12A, § 1-9-204
Oklahoma Code Comment
Two changes are made in this section. One change is found in section 9-204(c) , where language has been added to expressly validate a "future advances" clause in transactions that involve the sale of accounts, chattel paper, payment intangibles or promissory notes. This is believed to be the case under existing law even though there appear to be no Oklahoma decisions directly addressing such "sale" transactions. The other change is to preclude the effectiveness of an after-acquired property clause in relation to the newly covered collateral of commercial tort claims.
Oklahoma courts previously limited the reach of a future advances clause to debts of the same class as the primary obligation unless the security agreement clearly indicates otherwise. See Security Nat. Bank and Trust Co. v. Dentsply Professional Plan, 617 P.2d 1340 (Okla. 1980); Texas Kenworth Co. v. First Nat. Bank of Bethany, 564 P.2d 222 (Okla. 1977); and Blue v. H-K Corp., 629 P.2d 790 (Okla. App. 1981). No such limitation appeared in either the old or revised Article 9, and revised section 9-204 Official Comment 5 indicates that such cases are rejected. Moreover the matter is one of interpretation of the security agreement. This represents an opportunity to rethink the issue in Oklahoma, giving due consideration to the statutory language and comments, case law elsewhere, and the need for uniformity, all of which argue that the comment should be followed, particularly since it is clear the issue can be dealt with by a specific enough contractual provision and is not one of fundamental policy. To be safe, one may wish to take into account any antecedent debt that will be secured and specifically mention it, from concern that a court may follow Dentsply and conclude it was not intended to be covered. This may logically be viewed as unnecessary given the plain meaning of the statute, but given the previous position of the Oklahoma courts with respect to future advances, more liberal interpretations of section 9-204 on this point are risky to rely upon despite the statutory language and comment. See, e.g., First Nat. Bank v. First Interstate Bank, 744 P.2d 645 (Wyo. 1989). Finally, while Oklahoma case law is liberal as to preserving security when there are changes in the debt secured (see, e.g., Blue v. H-K Corp., 629 P.2d 790 (Okla. App. 1981) (renewal, extension, or refinancing of existing debt not a future advance requiring a future advance clause)), to be safe the secured party may wish to describe the debt in terms of the indebtedness and not its evidence (the note), and to state that renewals, extensions, replacements, and the like of the original debt are secured.
As there is no change in substance with respect to after-acquired property clauses, Oklahoma case law in this context, such as National Livestock Credit Corp. v. First State Bank of Harrah, 503 P.2d 1283 (Okla. App. 1972) (denying application of after-acquired clause where the debtor had no rights in the property), and Kinetics Technology Intern. Corp. v. Fourth Nat. Bank of Tulsa, 705 F.2d 396 (10th Cir. 1983) (compare Security State Bank of Wewoka v. Dooley, 604 P.2d 153 (Okla. App. 1979) and Morton Booth Co. v. Tiara Furniture, Inc., 564 P.2d 210 (Okla. 1977)), should remain generally viable. See also American Nat. Bank and Trust Co. of Sapulpa v. National Cash Register Co., 473 P.2d 234 (Okla. 1970). However, both Smiley v. Wheeler, 602 P.2d 209 (Okla. 1979), and In re LMS Holding Co., 153 B.R. 581 (Bankr. N.D. Okla. 1993) need to be re-examined in light of revised Article 9's more explicit treatment on continuation of secured claims when collateral is transferred. See revised sections 9-203(d) and 9-508 . See also Georgia-Pacific Corp. v. Lumber Products Co., 590 P.2d 661 (Okla. 1979), revised Article 9 sections 9-203, 9-102 , 9-325, and 9-326, and the Oklahoma Comment to section 9-203 .